Margrethe Vestager – Photo © European Union 2022
(BRUSSELS) – The Commission put a block Thursday on the merger of Daewoo Shipbuilding & Marine Engineering with Hyundai Heavy Industries, saying it would create a dominant position for construction of large LNG vessels.
The Commission says the proposed merger would lead to reduced competition in the worldwide market for the construction of large liquefied gas (‘LNG’) carriers (‘LLNGCs’). The parties did not formally offer remedies to address the Commission’s concerns.
“Large LNG vessels are an essential element in the supply chain of liquefied natural gas (LNG) and enable the transport of this source of energy around the globe,” said EC vice-president Margrethe Vestager: “LNG contributes to the diversification of Europe’s source of energy and therefore improves energy security. The merger between HHIH and DSME would have led to a dominant position in the global market for the construction of large LNG vessels, for which there is significant demand from European carriers. Given that no remedies were submitted, the merger would have led to fewer suppliers and higher prices for large vessels transporting LNG. This is why we prohibited the merger.”
The Commission’s decision follows an in-depth investigation of the proposed transaction, which would have combined DSME and HHIH, two worldwide leading shipbuilders. Both companies are global leaders in the construction of large LNG carriers, and two of the three largest players in this very concentrated market.
Large LNG carriers are an essential element in the supply chain of LNG. They are highly sophisticated vessels that can carry large quantities of LNG (145 000m3 and above) at a temperature of minus 162 degrees Celsius. Over the past five years, the worldwide market for the construction of large LNG carriers represented up to 40 billion, with European customers accounting for almost 50% of all orders.
During the investigation, the Commission received feedback from a large number of customers, competitors and other third parties. These companies were concerned that the transaction would create a company with a dominant position in the worldwide market for the construction large LNG carriers, reduce competition and increase prices for these vessels.
More information will be available on the Commission’s competition website, in the public case register under the case number M.9343.
